Tag Archives: Philadelphia commercial real estate

The U.S. office market continued to benefit from strong fundamentals going into 2018, despite continued deceleration in net absorption, occupancy, and rental rate growth.

With robust corporate profits and continued office-use job growth, that trend is expected to hold through the year as the recently approved tax cuts and expected gradual increases in interest rates make the nation’s commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – an attractive place for investors to park capital and get cash flow.

“You’re going to like GDP growth over the next few months,” CoStar Portfolio Strategy’s Hans Nordby said during CoStar’s year-end 2017 State of the U.S. Office Market report, co-presented with managing consultant Paul Leonard. “Corporate profit growth is a good story, and if you already think it’s strong, look underneath the hood. It’s even better.”

The improved profit growth outlook for the services sector and other industries in the U.S. and Philadelphia commercial real estate markets that drive office demand, along with expected higher GDP growth projected at a very strong 2.5% to 3% in the next few months, should help office job growth hold steady at strong levels for the next few month, Nordby said.

The vacancy rate among national and Philadelphia commercial real estate listings held steady at 10.1% at the end of the fourth quarter 2017, unchanged from the same period a year prior, despite a large amount of new supply and a 20% decline in office net absorption to 65 million square feet for 2017.

Meanwhile, the total amount of office property acquired by investors declined about 15% in 2017 from the prior year, largely due to a sharp drop in office trades in New York City and the rest of the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space.

Despite the declining sales volume, average prices in primary markets continued to rise, prompting investors to fan out into secondary markets such as suburban Phoenix, where Transwestern Investment Group and JDM Partners acquired Marina Heights, State Farm’s office campus in Tempe, AZ, for $930 million at $459 per square foot.

Leonard, however, sees the national office vacancy rate within both U.S. and Philadelphia commercial real estate listings ticking up beginning this year through 2020 as the expected new supply of space finally begins to outpace demand.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals. If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

Somewhat lost in the wave of store closure announcements last year was news that another major user of retail space abandoned a record amount of square footage. U.S. banks accelerated their pace of branch consolidation last year, closing a net of 2,069 locations, an 18 percent increase over the net number closed in 2016.

The net number of closed branches affecting the commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – amounts to about 10.46 million square feet of retail space closed, based on the average size of existing U.S. bank branches. That amount, however, does not include reduced square footage from branch relocations.

This CoStar report on bank closures and the effect they are having on national and Philadelphia commercial properties is being offered through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

That pace of closures could speed up even more in 2018 in markets with U.S. and Philadelphia commercial real estate as many bank holding companies reported plans to deploy a significant portion of expected savings from tax reform legislation enacted last month into increased spending on technology. They also are expected to support increasing reliance on digital and mobile technology by bank customers to conduct more of their banking activity.

Wells Fargo & Co. is the poster child of the movement. It closed a net of 194 branches last year – the highest among all U.S. banks — and it expects to close 250 branches or more in 2018 in parts of the U.S. and Philadelphia commercial real estate market, plus as many as 500 in each 2019 and 2020.

“Based on our current assumptions regarding consumer channel behavior and our own technology advances as well as other factors, we can see our total branch network declining to approximately 5,000 by the end of 2020,” said John Shrewsberry, CFO of Wells Fargo. As of Sept. 30, 2017, Wells Fargo operated 6,082 U.S. branches.

The bank is also reducing properties and other businesses including stand-alone mortgage locations and is transitioning operational activities in its auto business from 57 regional banking centers into three larger regional sites in a move that potentially could impact national and Philadelphia commercial real estate listings.

Citizens Financial Group represents another approach banks are taking in shedding excess space involving the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – which will reduce the overall square footage of each branch.

“There’s a little bit of pruning of the number of locations, but the greater element of that program is trying to take 4,200-square-foot branches and turn them into 2,500- or 2,200-square-foot branches,” said Bruce Van Saun, chairman and CEO of Citizens Financial. “I’d say, by 2021, I think we’ll have gone through 50 percent of the branches as the target.”

Citizens operates more than 1,100 branches. The rent savings from the effort will be reinvested in digital technologies, Van Saun added.

Meanwhile, 85 percent of banks dealing with U.S. and Philadelphia commercial real estate listings plan to make digital transformation programs a business priority for 2018, according to the EY Global Banking Outlook 2018.

“In order for banks to weather the performance challenges that lie ahead, they must prepare for a future led by innovation and technology,” said Jan Bellens, EY Global Banking & Capital Markets Deputy Sector Leader. “The pace of innovation continues to accelerate, and banks must have a strategy in place to ensure their implementation of new technology is effective.”

According to EY, 59 percent of banks surveyed anticipate that their technology investment budgets will rise by more than 10 percent in 2018.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals. If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

With a large increase in the amount of office construction nationwide and continued building of warehouse, distribution facilities, and multi-family housing, the outlook for commercial development hasn’t been this strong in years.

However, the increased building activity is exacerbating the already-keen competition for skilled construction workers in the commercial real estate market – including Philly office space, Philly retail space and Philly industrial space. Combined with the rising cost of construction materials, fuel, and services, the labor shortage is expected to squeeze commercial contractors this year, potentially pushing back the timetables for some CRE projects in the development pipeline.

Recent data from the U.S. Bureau of Labor Statistics and the temporary employment agency Manpower Group suggest contractors’ costs continue to rise and they are having a tough time finding labor, in many cases luring away workers currently involved in other U.S. and Philadelphia commercial real estate properties from rival firms with offers of higher pay, according to Kenneth Simonson, chief economist for Associated General Contractors, which recently released its 2018 forecasts and membership survey.

Three-quarters of construction firms involved in the U.S. and Philadelphia commercial real estate markets expect to expand their payrolls this year amid rising confidence that economic conditions will remain strong as tax rates fall and as the White House and Congress pursue business deregulation, according to AGC’s 2018 Construction Industry Hiring and Business Outlook.

Of the more than 1,000 construction companies and contracting firms that participated in the survey, 44 percent expect net expansion of demand for all types of construction services related to both national and Philadelphia commercial real estate listings, the strongest period of growth in the history of the 10-year-old survey.

This good news is tempered by concerns in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – over workforce shortages, rising labor, and business costs and whether government plans to invest $1 trillion in the nation’s roads, highways, bridges, power grid, and other infrastructure can move forward.

Rising materials, fuel and other non-labor costs also are squeezing contractors dealing with U.S. and Philadelphia commercial real estate listings. The Producer Price Index for inputs to construction, excluding capital investment, labor, and imports, increased 4.8 percent year over year in November, exceeding the 3 percent PPI increase for new nonresidential building construction. The PPI for all goods used in construction, including diesel fuel and other items consumed by contractors, rose 5.6 percent, the largest increase in six years.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals. If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

January 8, 2018 – Marlton, NJ – Commercial real estate brokerage WCRE reported in its latest quarterly analysis that the Southern New Jersey market is in largely good shape, despite a seasonal drop in leasing activity.

“Aside from an expected leasing slow-down in the fourth quarter, 2017 was a strong year for our market,” said Jason Wolf, founder and managing principal of WCRE. “All the elements for success are in place, including a labor market that is heating up, record gains in the financial markets, and continued deal and prospecting activity and enthusiasm.”

There were approximately 210,525 square feet of new leases and renewals executed in the three counties surveyed (Burlington, Camden and Gloucester), which was about half the total compared with the previous quarter. While leasing slowed considerably, the sales market stayed active, with more than 1.88 million square feet on the market or under agreement and an additional 205,364 square feet trading hands.

New leasing activity accounted for approximately 25.7 percent of all deals. Overall, net absorption for the quarter was in the range of approximately 65,250 square feet.

Overall vacancy in the market is now approximately 10.1 percent, which is an uptick of a third of a point from the previous quarter.

Average rents for Class A & B product continue to show strong support in the range of $10.00-$14.50/sf NNN or $20.00-$24.50/sf gross for the deals completed during the quarter. These averages have stayed within this range for most of this year.

Vacancy in Camden County improved throughout the year, standing at 11.7 percent for the quarter, up a bit from the third quarter, but down from 13.3 percent at the beginning of the year.

Burlington County vacancy was at 8.5 percent, a slight increase in a year that saw marked improvement overall.

WCRE has expanded into southeastern Pennsylvania, and the firm’s quarterly reports now include a section on transactions, rates, and news from Philadelphia and the suburbs. Highlights from the first quarter in Pennsylvania include:

Philadelphia’s office market saw increasing vacancy in the Central Business District during 2017, as several large tenants emphasized efficiency and returned large blocks to the market. Still, we see increasing employment and new construction, both of which bode well for continued strength.

The Philadelphia retail sector continues to struggle. It has been affected by the same challenges facing retail businesses everywhere. Namely, the shift to online retailing. Still, there were some positive signs amid the announced store closings and bankruptcies. Community shopping centers remain an area of strength in the market, with vacancy rates nearly half the national average.

The Philadelphia industrial market continues its hot streak, and the outlook is positive. Vacancy rates for flex and industrial properties in Philadelphia are well below the regional and national averages, and this is expected to continue. Industrial vacancy in Philadelphia is currently at 7 percent, and net absorption was in the range of 1.7 million square feet.

WCRE also reports on the Southern New Jersey and Philadelphia retail market, noting that holiday spending reached the highest levels since 2011, with both online and brick-and-mortar retailers reaping gains. Overall holiday retail sales posted gains of 4.9 percent over last year, with online retailers gaining 18.1 percent. Other highlights from the retail section of the report include:

Retail vacancy in Camden County stood at 8.5 percent, with average rents in the range of $12.75/sf NNN.

Retail vacancy in Burlington County stood at 9.9 percent, with average rents in the range of $13.83/sf NNN.

Retail vacancy in Gloucester County stood at 7.2 percent, with average rents in the range of $14.64/sf NNN.

The full report is available upon request.

About WCRE

WCRE is a full-service commercial real estate brokerage and advisory firm specializing in office, retail, medical, industrial and investment properties in Southern New Jersey and the Philadelphia region. We provide a complete range of real estate services to commercial property owners, companies, banks, commercial loan servicers, and investors seeking the highest quality of service, proven expertise, and a total commitment to client-focused relationships. Through our intensive focus on our clients’ business goals, our commitment to the community, and our highly personal approach to client service, WCRE is creating a new culture and a higher standard. We go well beyond helping with property transactions and serve as a strategic partner invested in your long term growth and success.

The top 1,000 corporate, government and institutional occupiers in the U.S. hold leases worth an aggregated rent value of more than $135 billion, encompassing just over 8.4 billion square feet of office, industrial, and flex space across about 115,500 properties, according to a recent analysis of CoStar Group tenant data.

The study ranks occupiers by the current value of rents paid across their U.S. real estate portfolios in CoStar’s database. Total rent value was calculated by multiplying the space occupied by tenants in each building by the estimated rent value per property in the commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – and providing a total lease value for each occupier across markets.

Of the top 1,000, Amazon.com had the highest overall rent value relative to its occupied square footage among U.S. and Philadelphia commercial real estate properties with a total $1.34 billion in rent value across 352 U.S. properties totaling more than 130 million square feet of industrial, office, and flex space. Amazon controls large blocks of office space in Manhattan, San Francisco and its headquarters city of Seattle, among other markets.

The high dollar value of the internet retailer’s lease obligations can be attributed to its robust absorption of office space in the U.S. and Philadelphia commercial real estate markets in recent years, along with its growing network of hundreds of fulfillment, customer service, and other distribution facilities.

For purposes of the study, which did not include retail properties, Amazon also has broadened its property footprint with the non-grocery assets in its June acquisition of Austin-based Whole Foods Market, Inc. Amazon occupancy is sure to grow even larger in coming years with the anticipated announcement of the site for its proposed $5 billion HQ2 corporate headquarters campus, which will have capacity for 50,000 employees and 8 million square feet.

The internet seller’s request for proposals (RFP) announcement set off arguably the largest economic development and business attraction scramble involving national and Philadelphia commercial real estate listings in modern corporate history last summer, with Amazon revealing that it received proposals from 238 cities and regions across 54 states, provinces, and local or regional jurisdictions throughout North America. Rumors are swirling that Amazon will soon announce the short list of contenders or even the winning city.

“The number of banks and tech companies among the largest rent payers was revealing,” said CoStar Senior Research Director Corey Durant. “Who would have thought the Dept. of Justice would have the fourth-highest rent value among the 1,000 largest tenants? Amazon, Apple, Google and Microsoft were all near the top as one might expect. However, DaVita Healthcare, with its network of dialysis treatment centers stood out as a definite riser at #21.”

Other significant findings in the study included the high rent value in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – contributed by federal government agencies and other state, local and regional jurisdictions. Of the top 25 occupiers in total rent value, the U.S. Dept. of Justice ranked just behind Wells Fargo at #4, representing total rent value of $822 million in more than 850 facilities totaling 24.5 million square feet.

After Amazon, the #2 and #3 spots involving U.S. and Philadelphia commercial real estate listings are held by two of the nation’s largest banks, Bank of America and Wells Fargo. Other financial institutions in the top 25 include JPMorgan Chase, Morgan Stanley, Citigroup and the U.S. Treasury Dept., which occupies nearly 300 properties for a total of nearly 13.5 million square feet with a rent value of about $347 million, ranking #22 among the top 1,000 occupiers.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals. If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

The national retail vacancy rate ticked up 10 basis points for the second consecutive quarter to reach 5.2% in the third quarter of 2017 as retail leasing and net absorption slowed despite continuing improvement in the broader economy and growing consumer spending power, according to CoStar analysts.

The slower leasing performance in the third quarter for the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – reflects the ongoing store closures announced by several major retailers. In total, retailers have announced a record 101 million square feet of store closings this year, on top of 83 million square feet of store space that went dark in 2016.

However, despite signs of decelerating leasing demand for the national and Philadelphia commercial real estate markets, some analysts speculate that record levels of store closures will eventually have a ‘healing effect’ on the market as the weakest shopping centers shut down or are repurposed.

This report on U.S. and Philadelphia commercial properties is being made through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

Analysts argue that recent weakening of fundamentals does not necessarily justify the doomsday scenario suggested by gloomy headlines warning of a “retail apocalypse” or “Armageddon,” and the focus on the ongoing purge among national and Philadelphia commercial real estate properties masks the best-performing centers, many of which are adding stores and maintaining occupancy.

“Store closures have become a headline risk, and I think it is impacting the capital markets and pricing of retail property. But for shopping center owners and investors, these closures may be a necessary means to healing the market,” observed CoStar director of U.S. retail research Suzanne Mulvee in presenting the latest quarterly data during CoStar’s State of the Retail Market Q3 2017 Review and Outlook.

“Consumer spending (at the closed stores) needs to go somewhere, usually to another physical retailer, so we look at this trend as somewhat positive for the overall market,” Mulvee said. Surviving stores in the right locations “will ultimately come through this period even stronger than before,” added CoStar managing consultant Ryan McCullough.

One major issue contributing to concerns on Wall Street about U.S. and Philadelphia commercial real estate listings is the staggering amount of debt held by retail chains, incurred in part during the wave of leveraged buyouts by private-equity firms in recent years. For example, giant shoe retailer Payless Inc., which filed for Chapter 11 bankruptcy in April, incurred more than $700 million in new debt, including buyout borrowings, after being acquired in 2012 by Golden Gate Capital and Blum Capital Partners.

“If retailers can’t refinance the debt at reasonable rates, they will be forced into bankruptcy, and that gives them cover to break leases,” said Mulvee. “Capital is still positive on high-quality retail, but it is becoming even more bearish on weaker retail.”

The best-performing malls and shopping centers populating the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – will continue to attract tenants and retain value. Average and lower-performing properties will continue lose value and eventually close or be repurposed, according to the report.

U.S. retailers dealing with national and Philadelphia commercial real estate listings expect to open nearly 4,100 more stores than they will close in 2017, a conveniently overlooked fact in many news headlines focused chiefly on the number of store closings, according to “Decluttering the Retail Landscape,” a recent report by TH Real Estate. Competition from online sales is pushing weaker retailers out of business faster than ever before, but the report posits that should ultimately result in a financially healthier and more adaptable set of retailers and shopping centers that provide more appealing experiences and a compelling product mix for shoppers.

“When we subtract those non-competitive malls with vacancies of 40% or higher, we see a far different picture,” said CoStar’s McCullough. “It’s the troubled properties that lose a key tenant and set into motion an exodus of defections,” skewing the retail vacancy picture, he added.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals. If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

After being one of the few retail bright spots for several years coming out of the great recession, off-price department stores — such as Macy’s Backstage and Nordstrom Rack — appear to be reassessing their business models and making changes to their location strategies following several quarters of declining sales.

In an article written by Mark Heschmeyer for the real estate information firm CoStar, a recent rating agency survey showed several contributing factors for the recent sales declines in same-store performance.

Retailers rushed to open more off-price stores when demand was strong leading to the sector being “over-retailed” and prompting more competitive pricing and discounting within the sector.

Aggressive sales, promotions and coupons seem to have become a pervasive part of the full-line store strategy.

Rapid growth and convenience of e-commerce shopping is also taking its toll on off-price store sales, as it has with other bricks-and-mortar formats.

This report on the reason for recent sales declines in off-price outlets in relation to national and Philadelphia commercial properties is being offered through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

“The internet has bred a smarter customer: she knows where to get the best price; she knows if a bag is made for the outlets — or is the real deal. Sometimes she cares, sometimes she doesn’t, but she does want a great experience, whether it is easy parking, unique stores she can’t find everywhere, or amazing dining,” said the head of one retail advisory firm. “She also wants a smart, educated and engaged store associate. If she can’t get that, she gives up and goes to another store, or shops online.”

How this all plays out in the commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – is still too early to tell, but it seems to be clear that retailers are reassessing their off-price business models as far as store locations are concerned, the study noted.

Macy’s recently announced a change in location strategy for its Macy’s Backstage concept with all the announced openings for new Backstage stores slated to be located within full-line Macy’s stores rather than as standalone stores among other U.S. and Philadelphia commercial real estate properties.

“We are pleased with the performance of our Backstage stores within our Macy’s stores and are excited by the potential of this concept. It is the only mall-based, off-price concept which we now are realizing gives us a competitive advantage,” Karen M. Hoguet, CFO of Macy’s told analysts during the company’s recent quarterly earnings conference call. “Details are still being developed, but we plan to expand it aggressively next year.”

Macy’s executives added that they planned to start experimenting by positioning Backstages in “larger doors” in the future, and were looking at different parts of the online stores where they could be placed throughout both U.S. and Philadelphia commercial real estate listings,

It’s a smart concept, said the retail advisory firm source. “Having Macy’s incorporate its off-price channel into its stores is smart, given that its off-price concept name doesn’t have a lot of brand equity. Their customer is used to the ubiquitous couponing in its stores, and many of its boxes are over-sized and could use a merchandising refresher.”

In contrast, Nordstrom is opting to increase the distance between its Nordstrom Rack locations throughout the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – and the retailer’s full-line offerings, according to the study’s results.

Approximately 42% of its off-price stores among national and Philadelphia commercial real estate listings are currently located within five miles of the nearest full-line Nordstrom store. That’s changing as only 17% of new Rack stores scheduled to open will be located that close to an existing Nordstrom.

While the change in distance between stores when considering all U.S. and Philadelphia commercial real estate listings, could be the result of available real estate, it could also signal that the retailer is trying to mitigate the potential for cannibalization and brand dilution.

“Having plans that were now in hindsight too aggressive caused our teams to have to pull back a little bit,” Blake Nordstrom, president of Nordstrom’s told analysts in a recent conference call. “We think that culminated a little bit in that downward trend that we saw in the third quarter.”

Nordstrom Rack remains a meaningful part of the business, he added.

“Overall, our total off-price business is $5 billion,” he said. “It’s a healthy business and we see lots of opportunities and we are encouraged by it.”

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals. If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

Numerous times over the past several years, rising Treasury yields have prompted commercial real estate investors to speculate how the end of historically low interest rates would influence property values. Invariably, the yields reversed course — even after the Federal Reserve Board of Governors (The Fed) began, in late 2015, to ‘tighten’ monetary policy — and allowed capitalization rate compression to continue.

Investors, however, are once again pondering the question amid the Fed’s announcement earlier this month it would begin to unwind its nearly $4.5 trillion balance sheet. The Fed also indicated it expected a steady rise in the federal funds rate in the coming years affecting the nationwide commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – including a possible hike of 25 basis points in December that would take the benchmark rate to a range of 1.25 percent to 1.5 percent.

The actions are expected to move real interest rates involving U.S. and Philadelphia commercial real estate properties into positive territory, representing a “significant shift” from the negative rate environment that has fueled the recovery, according to an industry economic commentary issued in September.

This report on upcoming Fed action in relation to the valuation of national and Philadelphia commercial properties is being offered through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

Real estate observers suggest while the Fed remains methodical and transparent, interest rates in the U.S. and Philadelphia commercial real estate markets will likely inch up in an orderly fashion and won’t shock the market into a credit freeze. Additionally, waves of real estate equity and debt searching for yield should continue to fuel the low cap rate environment, albeit in a choppier fashion, they add.

“If I’m a buyer and I know my return on a piece of real estate is lower than it was a year ago, but there are no better investment alternatives, what am I going to do?” was the question posed by one leading real estate finance expert.

Given the lack of an alternative, this individual added, “Eventually, I’m probably going to go into the marketplace and participate.”

Even contrarians admit it’s tough to envision what could derail the market. Even so, one such noted naysayer said his firm is more frequently turning down investment opportunities involving national and Philadelphia commercial real estate listings after assessing the property’s performance under stressed interest and cap rate scenarios.

“It’s really hard to see how this party ends,” he said. “Investors look into the future and try to see how property values will drop from 20 percent to 30 percent, but at this point nobody sees disruption. I certainly don’t see it, and I’d like to. We do better in those environments.”

While real estate experts say they don’t necessarily welcome higher interest rates throughout the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – they acknowledge the Fed needs to tighten and unwind so it has tools to use in the next recession. With that in mind, the Fed’s timing is particularly critical.

This is because the current eight-year growth in the value of U.S. and Philadelphia commercial real estate listings is less than a year away from becoming the second-longest positive cycle in the post-World War II era, a distinction that is weighing on the psyche of investors.

“The Fed is going to have to be a little bit careful about pushing too hard on interest rates relative to the underlying growth of the economy,” one expert said. “I don’t know when the next recession is coming, but I’m willing to bet we’re closer to it than we are to the previous recession.”

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals. If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

The amount of uncalled or undrawn real estate investment capital, or “dry powder,” has grown to staggering levels. This increase has come at a time when the investment climate remains decidedly mixed, with top-quality assets in core markets commanding high valuations after a sustained up-cycle. As a result, investors are increasingly searching elsewhere for properties that offer potentially higher yields.

The effects are showing up in deal volume. The total dollar volume for real estate sales of $100 million or more in the commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – was 19.5 percent lower in the first half of 2017 compared to the same period in 2016. However, the deal volume for properties at prices of $100 million or less was just 2.3 percent lower, according to CoStar COMPs data.

Meanwhile according to Preqin, a leading source of information for the alternative assets industry, investors in U.S. and Philadelphia commercial real estate properties are finding it increasingly challenging to find attractive opportunities for allocating that raised capital, according to Oliver Senchal, head of real estate products for Preqin.

This report on the disruption of new capital flowing into existing investment funds in relation to national and Philadelphia commercial properties is being offered through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

“This [trend] places pressure on less-stablished fund managers, who are facing greater competition for the remainder of investor commitments and will have to find ways to stand out from one another to attract capital,” Preqin’s Senchal added.

Even as the volume of big real estate deals drops in the U.S. and Philadelphia commercial real estate markets, CRE continues to attract more institutional capital allocations. In fact, 2017 represents an important milestone in this regard, according to Cornell University’s fifth annual Institutional Real Estate Allocations Monitor survey.

The survey revealed that for the first time, global institutional investors’ average target allocation involving national and Philadelphia commercial real estate listings surpassed the 10 percent threshold.

Over the past five years, institutional portfolios throughout the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – have increased their exposure from 8.5 percent to 9.1 percent invested. This implies that real estate portfolios have increased by approximately $0.5 trillion in total value, through a combination of capital appreciation and new investments.

Although real estate has enjoyed a steady uptick in target allocations, the report reveals the pace of target allocations is moderating among U.S. and Philadelphia commercial real estate listings. Approximately 22 percent of institutional investors surveyed indicated they expect to increase their target allocations over the next 12 months, down from 30 percent in 2016.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals. If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

The rate of consolidation among bank branches has increased in the past two years as customers continue to embrace digital banking. Simultaneously, the number of new branch openings continues to fall. Analysts, however, view this as part of a larger shift in how retail branches are being utilized by customers and where those brick-and-mortar institutions need to be located.

Through the first nine months of this year, U.S. banks serving, among other business segments, the commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – have closed more than 2,600 branches. That is about 10 percent more than during the same time frame in each of the two previous years, according to statistics from the Federal Deposit Insurance Corp.

At the same time, U.S. banks involved with such assets as U.S. and Philadelphia commercial real estate properties have opened just 873 new branches this year. That number has steadily fallen each year from nearly 1,300 in the first nine months of 2013.

This CoStar report on the viability of physical bank facilities in relation to national and Philadelphia commercial properties is being offered through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

Over the past five years, the net number of bank branches has decreased by nearly 7,900 locations, representing approximately 19.74 million square feet of closed bank space.

Leading the closures list so far this year are:

JPMorgan Chase — 143 closures;

Wells Fargo — 138;

First-Citizens Bank & Trust — 135;

KeyBank — 117;

SunTrust — 117;

PNC — 114;

The Huntington National Bank — 109; and

Bank of America — 98.

Most of them show up on the list of banks closing the most branches in the last five years, including:

Bank of America — 810 closures;

JPMorgan Chase — 712;

PNC — 615;

Wells Fargo — 526;

SunTrust — 392;

Capital One — 338;

Branch Banking and Trust — 312; and

Citibank — 309.

Even having closed more than 140 branches this year in the U.S. and Philadelphia commercial real estate markets, and more than 700 in the last five years, JPMorgan officers were asked this week during the firm’s earnings conference call why they weren’t doing more to trim their 5,200-branch network given that mobile banking was up another 12 percent year-over-year.

The fact is, branches play a significant role for U.S. banks – they are a cheap source of capital.

“Seventy-five percent of our growth in deposits came from customers who have been using our branches,” Lake said. “On average, a customer comes into our branches multiple times in the quarter. I know that all sounds like old news, but it’s still new news or current news, so the branch distribution network matters.”

“We’re not being complacent to the consumer preference,” she said, “We’re building out all of the other sort of omni-channel pieces, as you know, so that we have the complete offering. If the customer behaviors start changing in a more accelerated fashion, we will respond accordingly.”

At Bank of America, customers dealing with national and Philadelphia commercial real estate listings – among other areas of business – and performing mobile banking transactions have increased 47 percent in the past 12 months. Mobile deposits now account of 21 percent of all check deposit transactions, according to Brian Moynihan, chairman and CEO of Bank of America.

“We processed nearly 14 million transactions, and the growth continues,” Moynihan said. “We recently processed a half of billion dollars in a single week.”

But, Moynihan added, the deposits of people that walk into a branch can be typically 10 times higher than the amounts people deposited digitally while dealing with various business segments such as the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space.

“Each day three-quarters of a million people come into our branches, and our teammates serve them well, and our scores at those branches are at all-time highs in terms of satisfaction, and 80 percent of the sales go on in that space,” he added.

That’s why he noted Bank of America would continue to invest in its physical branch network as it relates to U.S. and Philadelphia commercial real estate listings.

“We have been and we will continue to open centers and markets where you have a strong commercial banking wealth management client base,” he said.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals. If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

SOUTHERN NEW JERSEY & PHILLY CRE MARKETS PERFORMING STEADILY

October 6, 2017 – Marlton, NJ – Commercial real estate brokerage WCRE reported in its latest quarterly analysis that the Southern New Jersey market is in good shape, but remains in somewhat of a holding pattern.

“For most of 2017 we have seen an overall positive tone and conditions that usually indicate a period of strength,” said Jason Wolf, founder and managing principal of WCRE. “The national economy has been adding jobs, the financial markets are on a hot streak, and our market continues to attract outside investors – yet increased activity and enthusiasm are tempered by trouble in the retail sector and uncertainty related to current events.”

There were approximately 421,113 square feet of new leases and renewals executed in the three counties surveyed (Burlington, Camden and Gloucester), which represents an increase of approximately 6.6 percent compared with the previous quarter, and a 15 percent increase over the same period last year. While leasing showed moderate gains, the sales market was quite active during the third quarter, with more than 1.76 million square feet worth more than $105 million of completed sales transactions trading hands.

New leasing activity accounted for approximately 43.3 percent of all deals. Overall, net absorption for the quarter was in the range of approximately 91,600 square feet.

Overall vacancy in the market is now approximately 9.75 percent, which is a solid improvement over the previous quarter.

Average rents for Class A & B product continue to show strong support in the range of $10.00-$14.50/sf NNN or $20.00-$24.50/sf gross for the deals completed during the quarter. These averages have stayed within this range for most of this year.

Vacancy in Camden County maintained its dramatic improvement, standing at 10.8 percent for the quarter, down from 13.3 percent at the beginning of the year.

WCRE has expanded into southeastern Pennsylvania, and the firm’s quarterly reports now include a section on transactions, rates, and news from Philadelphia and the suburbs. Highlights from the first quarter in Pennsylvania include:

The Philadelphia industrial market continues its hot streak, and the outlook is positive. Vacancy rates for flex and industrial properties in Philadelphia are well below the regional and national averages, and this is expected to continue.

Philadelphia’s office market continues to gain strength across the board, with far lower vacancy rates than regional and national averages for both Class A and Class B properties in the Central Business District and the suburbs. We see increasing employment and new construction, both of which bode well for continued strength.

The Philadelphia retail sector is the one area that is not performing well. It has been affected by the same challenges facing retail businesses everywhere. Namely, the massive shift to online retailing and away from brick-and-mortar. Still, there were some positive signs amid the announced store closings and bankruptcies. Community shopping centers remain an area of strength in the market, with vacancy rates nearly half the national average.

WCRE also reports on the Southern New Jersey and Philadelphia retail market, noting slight declines in consumer confidence and related metrics as the third quarter wound down. Overall retail sales were 3.2 percent higher this year compared to 2016, and were likely impacted by the major hurricanes affecting Texas and Florida in late August and early September. Highlights from the retail section of the report include:

Retail vacancy in Camden County stood at 9.5 percent, with average rents in the range of $12.47/sf NNN.

Retail vacancy in Burlington County stood at 10.7 percent, with average rents in the range of $13.38/sf NNN.

Retail vacancy in Gloucester County stood at 7.9 percent, with average rents in the range of $14.10/sf NNN.

The full report is available upon request.

About WCRE

WCRE is a full-service commercial real estate brokerage and advisory firm specializing in office, retail, medical, industrial and investment properties in Southern New Jersey and the Philadelphia region. We provide a complete range of real estate services to commercial property owners, companies, banks, commercial loan servicers, and investors seeking the highest quality of service, proven expertise, and a total commitment to client-focused relationships. Through our intensive focus on our clients’ business goals, our commitment to the community, and our highly personal approach to client service, WCRE is creating a new culture and a higher standard. We go well beyond helping with property transactions and serve as a strategic partner invested in your long-term growth and success.

As the flood waters continue to recede in Texas and Louisiana, officials caution the storm waters continue to pose threats to life and property. However, the region is shifting into recovery mode and beginning to take a full measure of the unprecedented destruction brought by Hurricane Harvey.

An assessment of the potential impact of the epic storm on the Houston commercial real estate market indicates 27 percent of the market’s gross leasable area, representing approximately $55 billion in property value, was likely affected by flooding.

This report is being offered through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm, based on information collected and studies conducted by the by the CoStar commercial real estate information company.

Included in the estimated is 175 million square feet of commercial real estate market space located within the Houston metro’s 100-year flood zone that appears to have been inundated by the epic floodwaters, including some 72,000 apartment units and 20 million square feet of office space.

Harvey, which first made landfall at Rockport, TX, as a Category 4 hurricane early August 26 and then stalled over the Texas coast, broke all records to become the wettest tropical cyclone in the contiguous United States. Weather experts have estimated that through the middle of last week, the storms had dumped an estimated 20 to 25 trillion gallons of water on Texas and Louisiana.

The greater Houston commercial real estate market ranks as the sixth-largest metro area in the U.S. by total CRE space at 1.6 billion square feet. According to CoStar data as presented Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm, $16 billion of the $55 billion in property at risk is comprised of apartment buildings within the 100-year flood zone.

The densely populated Southwest Houston submarket segment of the overall Houston commercial real estate market, home to more than 66,000 apartment units, is likely to be the district most affected by flooding. Nearly 30 percent of the submarket’s apartment units are estimated to be impacted, with the Braeburn, Greater Fondren and Sharpstown neighborhoods having the largest number of units within the 100-year flood zone.